Exhibit 10.34
AGREEMENT
This Agreement dated as of August 18, 2003 (this "Agreement"), is entered
into between Xxxxx X. Xxxx ("Xxxx") and Monitronics International, Inc., a Texas
corporation (the "Corporation").
In consideration of the mutual agreements set forth herein, together with
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Transaction Fee. If the Corporation completes a sale of debt securities
or any derivative thereof or enters into a credit facility in a transaction or
series of related transactions, with total borrowings by the Corporation in
excess of $475,000,000 or such lower amount as approved by the board of
directors prior to February 1, 2004 (the "Transaction"), Hull shall receive a
transaction fee of $2,000,000 in cash payable at the closing of the Transaction
(the "Transaction Fee"); provided, however, that if Hull ceases to be employed
by the Corporation voluntarily or for "Cause" (other than pursuant to clause (i)
of the definition thereof) or "Nonperformance by Employee" (as those terms are
defined in Hull's Employment Agreement dated October 21, 1994 with the
Corporation) prior to February 1, 2005, Hull shall refund a portion of the
Transaction Fee to the Corporation equal to the product of (A) $1,200,000 times
(B) the quotient of (i) the remainder of 549 (representing the number of days
from and including the date hereof to and including January 31, 2005) minus the
number of days from and after the date hereof that Hull was employed by the
Corporation divided by (ii) 549.
2. Initial Stock Repurchase. Effective upon the closing of the Transaction,
the Corporation shall xxxxx Xxxx the option (the "Initial Put Option"),
exercisable within 90 days of the closing date of the Transaction, to require
the Corporation to repurchase up to 400,000 shares of its Class A common stock
held by Hull or the Hull Family Limited Partnership (the "Partnership") at a
purchase price of $2.50 per share payable in cash. Hull shall allocate such
shares to be sold between Hull and the Partnership in Hull's sole discretion. If
Hull desires to exercise the Initial Put Option, he shall give written notice to
the Corporation within 90 days of such closing of his desire to exercise the
Initial Put Option, specifying the number of shares to be sold to the
Corporation by each of Hull and the Partnership (the "Initial Put Option
Notice").
3. Put Option. Effective upon the closing of the Transaction, the
Corporation shall xxxxx Xxxx the option (the "Put Option"), exercisable no more
than once in each of the five fiscal years of the Corporation commencing with
the fiscal year ending June 30, 2004 and ending with the fiscal year ending June
30, 2008, to require the Corporation to repurchase for cash a number of shares
of common stock of the Corporation not to exceed the number of Available Shares
(as defined below) held by Hull or the Partnership for cash at a price per
Available Share equal to the Put Price. The "Put Price" per Available Share
shall be equal to the amount that would have been distributed to a holder of one
share of common stock in a liquidation of the Corporation on the final day of
the prior fiscal year in accordance with the Corporation's Articles of
Incorporation as in effect on such day, assuming that: (a) the aggregate amount
to be distributed in such liquidation is (i) the product of (x) the Consolidated
Cash Flow (as defined in
"Description of Notes-Definitions" in the Preliminary Offering Memorandum dated
August 1, 2003 with respect to the Corporation's offering of senior subordinated
notes due 2010 (the "Offering Memorandum")) for the last quarter of the prior
fiscal year on an annualized basis multiplied by (y) 5.6, minus (ii) the sum of
the total amount of Indebtedness (as defined in the "Description of
Notes-Definitions" in the Offering Memorandum) as of the end of such prior
fiscal year plus the aggregate amount that would be paid to holders of preferred
stock who did not exercise their conversion rights in the liquidation and (b)
the conversion or exercise in full of all options, securities or other rights
that were convertible into, or exercisable or exchangeable for, common stock of
the Corporation, whether or not vested, and that would have been in the money
with respect to a liquidation on the date that such aggregate amount was
available for distribution. By September 30 of each year beginning with
September 30, 2003 and ending on September 30, 2007, the Corporation shall
deliver to Hull a computation of the Put Price for the fiscal year of the
Corporation previously ended. As used herein, (a) the "Available Shares" shall
mean the quotient of the Base Amount divided by the Put Price, and (b) the "Base
Amount" shall mean the sum of $500,000 plus, for each prior fiscal year of the
Corporation in which the exercise price for the Put Option required to be paid
to Hull was less than $500,000, the remainder of $500,000 less the amount
required to be so paid. As an example of the foregoing, the Base Amount for the
exercise of the Put Option in fiscal year 2004 would be $500,000. As another
example of the foregoing, if Hull does not exercise the Put Option in fiscal
year 2004 and exercises the Put Option in fiscal year 2005 and is paid $250,000
for the Available Shares sold pursuant thereto, the Base Amount for the exercise
of the Put Option in fiscal year 2006 would be $1,250,000 (i.e., $500,000 +
$250,000 + $500,000). If Hull desires to exercise the Put Option, he shall give
written notice to the Corporation of his desire to exercise the Put Option,
specifying the number of shares to be sold to the Corporation by each of Hull
and the Partnership (together with the Initial Put Option Notice, the "Notice").
4. Closing of Each Purchase and Sale. The closing of each purchase and sale
pursuant to the exercise of the Initial Put Option or the Put Option shall take
place on a date mutually agreeable to Hull and the Corporation, but in no event
later than 30 days after the date of the applicable Notice, and shall take place
at the principal offices of the Corporation in Carrollton, Texas at 10:00 a.m.,
Dallas, Texas time, or at such other place and time mutually agreed to in
writing by the Corporation and Hull; provided, however, that if in the good
faith determination of the Board of Directors of the Corporation, the
Corporation is not able to purchase the number of shares from Hull set forth in
the Notice on the scheduled closing date because such purchase would either
violate the Texas Business Corporation Act (the "TBCA") or would be prohibited
under any indenture, credit agreement or other agreement applicable to
borrowings by the Corporation that it is a party to (collectively, the "Credit
Agreement"), the Corporation shall repurchase the maximum amount of shares from
Hull that it may lawfully and contractually repurchase on such date and shall
repurchase the remainder on the earliest possible date or dates thereafter that
it can lawfully and contractually do so under the TBCA and the Credit Agreement.
At each such closing pursuant to Section 2 or 3, Hull and/or the Partnership
shall deliver to the Corporation the certificates representing the shares to be
purchased and sold, duly endorsed for transfer or accompanied by blank stock
powers, and the Corporation shall pay Hull and/or the Partnership the purchase
price therefore by certified or cashiers' bank check payable to the order of
Hull or the Partnership, as directed by Hull.
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5. Stock Option Plan. After the closing of the Transaction, if the
Corporation establishes any stock option plans for the directors or executive
officers of the Corporation while Hull is the Chief Executive Officer of the
Corporation, Hull shall be awarded options to purchase at least 10% of the
shares of capital stock available for issuance by the Corporation under any such
plans and the options awarded to Hull shall, among other terms that may provide
for periodic or early vesting, vest no later than upon a change in control of
the Corporation, Hull's termination of employment by the Corporation without
cause, or Hull's death or disability (all as shall be defined in his option
agreements with respect to such options).
6. Governing Law; Venue. This Agreement and all rights of the parties
hereunder shall be governed by the laws of the State of Texas. Each of the
parties hereto hereby agrees that the state and federal district courts located
in Dallas County, Texas shall have exclusive jurisdiction over any claim or
dispute arising from this Agreement or the parties' actions in connection
herewith.
7. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same agreement.
8. Severability. In case any provision of this Agreement shall be found by
a court of law to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
Monitronics International, Inc.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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Title: VP and CFO
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[Signature Page - Agreement]
